Business Plan – Making the Executive Summary

Executive summary of a business plan

One of the first sections of the business plan is the executive summary. You want this section to summarize the basic and important parts of your business such as what kind of business it is, what is the business structure that is whether it is the sole proprietorship, partnership or corporation, number of employees, as well as the business concept.

The executive summary of a business plan starts with a description of the product and service that you will sell.

The business plan executive summary should clearly state the amount of funding that the business requires, the amount that you are seeking as funding, the repayment schedule, the borrowers equity share and debt to equity ratio after the loan, security or collateral offered as well as the market value and estimated value or price quote for any equipment that you plan to purchase with the loan.

The executive summary should be kept short and to the point. Usually a length of one page is sufficient for this section. However it can extend to two pages with the business is complicated and the funding required is more extensive.

Business Plan – Making Business Description

Business description section of the business plan is an extension of the executive summary section and describes the business in much greater detail.

You will get into more detail regarding what kind of business it is such as retail, wholesale, manufacturing etc. You will also talk about the competitors and about the industry in general. You will discuss the growth potential of the industry and what kind of trends you are hoping to cash in on in the industry growth. It is a good idea to provide statistics and research information on the opportunity and your business presence in the industry.

You can also talk about the target market for a product or service and how the product will be sold and distributed. This is a good place to mention the system that is going to be in place as well as the strategies going to be used to market and promote the product or service such as the advertising, promotions and customer service strategies.

Describe your product or service in detail. Discuss the products usability and application to the users and emphasize any unique features that set your proper services apart from the competitors already in the industry.

If you are going to use the business plan for the purpose of funding your business, you should also explain how the money borrowed is going to be used to grow or develop the business and what the expected return on investment is likely to be. If you already have any orders in hand, this is a good place to mention it.

Business Plan – Making Market Strategy Plan

Market strategy plan section of the business plan should focus solely on your customers and your competition. Based on the analysis of your estimates as well as existing consumers, you will adapt certain marketing strategies. You should speak about how much of the existing market you will be able to capture and how do you intend to create a new market and demand if required.

Analyzing your sales, and reaction to your product in the market can be a tricky proposition. It is difficult to predict the sales before it happens but doing your market research as outlined in the previous sections of this website, will enable you to get a fairly good idea of what kind of competition you are facing and what is your target market. All the research that you do on your consumer and competition will be crucial in determining your cost and pricing strategy as well as the mode of distribution.

If you use the data from the market-research which you probably will have to in order to describe your customer base and competition, you should also mention citations and references as resources for that data. You should speak about your unique selling proposition, USP which in other word is what makes your product and business different. Talk about why your marketing strategy and the sales approach is ideal for your business and for your market.

Once you have defined the market, talk about the strategies that you’re going to use to meet your goals.

The marketing strategy can be roughly divided into three sections.

Price. In this segment explains the pricing of your product or service. Talk about the projected costs, as well as the cost of production, distribution as well as raw materials, advertising and overheads. Many experts recommend that you add 25 to 50% of each cost estimate specially warheads to ensure that you do not underestimate the costs at any point.

Distribution. In this section we talk about the cost of getting the product from the factory to the consumer. Depending upon what you are manufacturing or what service you provide, the cost to reach your target market will differ. You should also mention whether the product of the service is for upscale customers who not mind paying a premium product price on is it for a budget conscious consumer looking for a good deal. Study the channels that are being used by the competition. Mention whether you can choose the same channels or you are going to use different methods to reach your consumers.

Sales. In this section you talk about how your sales force is going to function to achieve its goals and also mention the pricing taxability, sales presentation, lead generation as well as other methods that are going to be used to sell the product or the service.

Business Plan – Making Competition Analysis Plan

Competitive analysis plan section of a business plan talks about the competition that a business faces. When you do a market research, part of it is to analyze the competition along with its strengths and weaknesses.

Talk about any advantage that you have over your competition in terms of your own product or service as well as any strategy that you are going to implement to supersede or thwart the competition.

The competitive analysis is very important because you do not want to make the mistake of assuming that there is no competition for your product. Even when there is no direct competition there mostly is in-direct competition with other businesses in the same field or industry.

Recognizing this early in your plan and having a strategy to deal with it helps you avoid rude shocks when you do not do business. Failing to analyze your competition can make the rest of your business plans become completely useless. In fact a lot of your plans such as marketing strategy and pricing of the product or service will depend upon what the competition is doing.

Business Plan – Making Operations and Management Plan

Operations and management plan section of a business plan talks about how your business will function on a daily basis. You talk about logistics and responsibilities assigned to different individuals and employees of the company. You will talk about the cash flow and the working expenditure working capital required for the regular operation of the business.

You will talk about the business managers and describing qualifications as well as the support staff that is needed to run the business. Any potential benefit to the community should be presented such as creation of new jobs, economy growth possible effect of environment for manufacturing and how they will be handled to confirm with local, state and federal regulations.

Business Plan – Making the Financial Plan

The financial plan section is one of the most crucial sections of the business plan.

Providing a business with enough funding and financial resources is what will make it successful and stand upon its own 2 feet. Needless to say this is the very backbone of your business. This section should describe the finances of your business in great detail and not only talk about the amount of money that you require but how it is going to profit in the future. The financial business plan should include the following things.

The income statement which talks about the business’s ability to generate income and cash as revenue, expenses, capital and cost of goods. You should generate a monthly income statement for the first year, quarterly statement for the second year and annual statements for the years thereafter.

The cash flow statement details the amount of money coming and going out of the business monthly for the first year and quarterly for each year thereafter. The resulting profit or loss at the end of the period is carried over to the last column to show accumulative amount. This section is important because if this statement shows that you’re operating at a loss you might need additional cash to meet the expenses. Most businesses have seasonal variations in their cash flow so if your cash flow statement looks identical every month you should have someone re-examine it.

The balance sheet talks about the assets, liabilities and equity over a said period. If you generate a balance sheet for each year for development of your business. You can also include any information that is not included elsewhere that will substantially influence the business. This section can also contain other issues such as return on investment, breakeven point for return on assets.

It is a good idea to take the help of an accountant with the financial section because most people find it the most difficult to write. It is difficult to predict figures and financial statistics in the future before the business having taken off and real experience gained in the field. An accountant can analyze your data and help you project realistic figures for the future operation of the business.

Making a Business Plan – What is a Business Plan & Why its Important

Making a business plan before you start a business should typically form an essential part of the business startup. However many entrepreneurs do not follow this step. But the ones that do swear by its usefulness and credibility and say that the business plan played a pivotal role in the success of the business. Statistics reveal that 60% of the people who used a formal business plan and this includes the small business owners say that it made a major difference to the success of the business.

One general opinion that you would get to hear often is that you only need a business plan when you are trying to raise money for business. Although it is true that a business plan is almost always required when you are looking for funding from banks and other lending institutions, a business plan serves many other purposes as well. A business plan helps you to define your business goals and objectives. As important as making the business plan, is the process involved in doing it. Going through the process of making a business plan helps you identify some common setbacks and potential problems that you might have otherwise ovelooked. A business plan does not guarantee success but it can help you avoid some common problems of business failures such as under capitalization and lack of market research.

As you research and develop your business plan you will be adding able to identify several weak spots. Identifying these weak spots arms you with the potential to find solutions beforehand as well.

So what really is a business plan? A business plan conveys your business goals and strategies and how you are going to use them in the future to reach potential customers, make sales, avoid potential problems, visualize the future of your business, how it’s going to develop and grow, what kind of structure and shape is going to take, what people are going to be involved and the roles they are going to play and also the amount of money that you’re going to finance the venture and keep it going to need till breaks even.

All this may sound intimidating but it really is not. But taking a systematic approach to making a business plan is needed do so effectively. In this section we will deal with the various steps required to make up business plan. There are three primary categories of a business plan.

The first one is known as the business concept where you discuss the industry you are going to operate in, your business structure, your product or service that you sell and how do you intend to make your business a success.

The second part is the marketplace section in which you describe, research and analyze a potential customer as well as the strategies that you are going to use to deal with the competition and target your customers.

The third section is the financial section which contains your details about the finances required, your potential income, cash flow requirements, balance sheets and other financial issues such as the breakeven analysis. Making the financial part of your business plan may require assistance from your account.

Furthermore these three sections can be broken down into six major parts.

  1. Executive summary.
  2. Business description.
  3. Market strategies.
  4. Competitive analysis.
  5. Design and development plan.
  6. Operations and management plan.
  7. Financial factors.

In addition to these sections a business plan also contains a short summary and a title page along with a table of contents. The summary or the introduction of a business plan is usually a quick summation of what the business is all about. It can also be an inspirational message that can be used by yourself and the employees of the company to seek motivation from time to time. It is not uncommon for businesses to use the summary of the business plan in the office as notices on soft boards etc. to keep employees motivated.

Importance Of A Business Plan

While many entrepreneurs tend to ignore this step, the majority of people who have used a business plan as a start up tool claim that it has been elemental in their success as entrepreneurs. A business plan consists of many parts starting with an executive summary and moving on to the financial plan, marketing plan etc. Each step if followed properly can lead to the creation of a guide for your business. Making a business plan can help you discover features, shortcoming and requirements of your business that might otherwise have overlooked. The process of making a business plan is equally important as the finished product as this process is extremely effective in making you examine all aspects of your business. If you include other people involved in the business such as employees, business partners etc., you will probably receive some very valuable input about the future potential of the business. A business plan is essential in planning the start up of yo your business as well as to determine its future growth. A business plan will help you realize important facts about it such as the amount of capital required now as well as for future sustenance, the competition faced, the marketing strategies that need to be employed future growth potential etc.